Associated British Foods has threatened to close one of the UK's two bioethanol plants if it does not receive state support after the government struck a tariff deal with the US. It said while the government has committed to "formal negotiations", it will begin consultations with 150 staff at its Vivergo bioethanol business in Hull "to effect an orderly wind-down". As part of an agreement to cut US tariffs, the government said it will remove a 19% tariff on exports of ethanol to the UK, and replace it with a tax-free quota of up to 1.4 billion litres of the fuel. AB Foods said unless help is provided, Vivergo will stop manufacturing before 13 September. The Vivergo bioethanol plant is the UK's biggest. The only other plant making the fuel in the UK is Ensus in Teesside, which is owned by Germany's Sudzucker Group. Ensus has also said it may have to shut its site because the UK-US trade agreement "fundamentally undermined its business position". Under the tariff deal, the US can export 1.4 billion litres of the fuel - equal to the UK's entire ethanol market - duty free, which means businesses in Britain do not have to pay tax if they buy the American fuel. In return, the government secured tariff cuts on UK exports to the US. AB Foods set a deadline of 25 June to reach an agreement with the government about support. "Yesterday, our extended deadline for the government to deliver that solution passed," the company said. While talks are continuing, AB Foods said: "Unless the government is able to provide both short-term funding of Vivergo's losses and a longer-term solution, we intend to close the plant once the consultation process has completed and the business has fulfilled its contractual obligations."
Food giant threatens to close UK biofuel plant after US tariff deal
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"AB Foods Warns of Closure for UK Bioethanol Plant Amid US Tariff Changes"
Bbc News
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TruthLens AI Summary
Associated British Foods (AB Foods) has issued a warning regarding the potential closure of its Vivergo bioethanol plant in Hull, one of the UK's two bioethanol facilities, if it does not receive necessary state support. This announcement follows the UK government's recent tariff agreement with the United States, which includes the removal of a 19% tariff on ethanol imports to the UK, replacing it with a quota allowing up to 1.4 billion litres of duty-free ethanol from the US. AB Foods has stated that it will commence consultations with its 150 employees to prepare for an orderly wind-down of operations unless a resolution is reached. The company has set a deadline of June 25 for the government to provide support, emphasizing that without short-term financial assistance and a long-term strategy, the plant's operations will cease before September 13.
The Vivergo facility is critical to the UK’s bioethanol production, being the largest of its kind in the country. The only other producer, Ensus in Teesside, owned by Germany's Sudzucker Group, has also indicated that it may be forced to shut down due to the unfavorable conditions created by the UK-US trade deal. The new agreement allows US ethanol exports to enter the UK market without tariffs, effectively jeopardizing the competitiveness of domestic producers. AB Foods has expressed concern that the current trade arrangement fundamentally undermines their business viability, echoing the sentiments of Ensus. As negotiations with the government continue, AB Foods is pressing for immediate and long-lasting solutions to avoid the imminent closure of the Vivergo plant, which plays a significant role in the UK’s renewable energy landscape.
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